06/26/97 C-B REALTY AND TRADING CORP. v. CHICAGO

June 26, 1997

C-B REALTY AND TRADING CORP., A CORP.; HARRIS TRUST & SAVINGS BANK, A CORP. AS TRUSTEE UNDER TRUST AGREEMENT DATED JULY 25, 1975; JULIUS BRAUN, MORRIS BRAUN, JOINT VENTURERS UNDER THE STYLE OF C-B REALTY JOINT VENTURE, PLAINTIFFS-APPELLANTS,v.CHICAGO AND NORTH WESTERN RAILWAY CO., A CORP., AND CHICAGO AND NORTH WESTERN TRANSPORTATION, A CORP., DEFENDANTS-APPELLEES.

This case possesses a Dickensian quality. It concerns a contract entered into in 1908 and a lawsuit filed in 1974. Unfortunately, this decision probably will not put an end to the dispute.

We are called on to decide what the parties to the contract meant when they agreed to a "water-tight" floor for a railroad bridge (they meant water-tight) and we must decide a dispute over who is to pay real estate taxes for the land under the bridge (the railroad does).

FACTS

The plaintiffs in this case are C-B Realty and Trading Corporation, Harris Trust & Savings Bank, as trustee under trust agreement dated July 25, 1975, Julius Braun, Morris Braun, Eve Braun, joint venturers under the style of C-B Realty Joint Venture (collectively C-B Realty). The defendants are Chicago & North Western Railway Company and Chicago and North Western Transportation (collectively C&NW).

"In 1974, plaintiffs *** sued defendants *** for breach of two covenants in a 1908 contract pertaining to the payment of certain taxes and the maintenance of a railroad bridge.

In 1980, the trial court entered partial summary judgment in favor of plaintiffs by ruling that the two covenants ran with the land, and that plaintiffs were entitled to enjoy the benefits conferred by the covenants.

In 1988, following a trial without a jury, concerning only damages and not liability, the court awarded plaintiffs $541,422.92, the full amount sought.

*** Defendant operates an elevated commuter service to a passenger depot in Chicago. Just north of the passenger station is a railroad bridge which passes over a portion of a former railroad freight warehouse. The warehouse extends in a semicircular manner eastward under the bridge, and then curves southward.

In 1908, defendant's predecessor in interest entered into a contract with the Pittsburgh, Cincinnati, Chicago and St. Louis Railway Company, relating to the construction of that railroad bridge, and the transfer of rights in certain property in Chicago.

In 1959, plaintiffs acquired title to the land upon which the freight warehouse rests, along with some adjoining property, as the successor to the interests of the Pittsburgh Company.

On September 20, 1974, plaintiffs filed this suit. Count I was withdrawn. Count II sought a judgment declaring that defendant was obligated to pay three-fourths of plaintiffs' taxes. The 1908 contract stated in paragraph 9 that defendant would pay three-fourths of taxes levied on the land now owned by plaintiffs.

'9. The North-Western Company [now defendant] will pay all taxes and assessments which may be levied against said overhead bridge or structure, and will also pay three-fourths of all taxes and assessments which may be levied against the tract of land owned by the Pittsburgh Company [now plaintiff], across which the said overhead structure is located.'

Count III of the complaint alleged that defendant had failed to maintain a water-tight floor on its bridge, and sought compensation for damage to the freight warehouse. The 1908 contract stated in paragraph 3 that defendant would maintain the bridge with a water-tight floor over the freight house.

'3. The North-Western Company [now defendant] will construct, maintain and renew at all times the said bridge or structure so that the same shall have a water-tight floor construction over the entire area of the tracks and property of the Pittsburgh Company, and the North-Western Company at its own sole cost and expense, will reconstruct and rearrange the freight house of the Pittsburgh Company [now plaintiff] in accordance with said Exhibit A and under the direction of Chief Engineer of the Pittsburgh Company.'

Cross-motions for summary judgment were filed on the issue of whether paragraphs 3 and 9 were covenants running with the land. On December 19, 1980, Judge Murray entered an order in favor of plaintiffs, finding paragraphs 3 and 9 created covenants running with the land. The judge explained that the two paragraphs involved the enjoyment of the land, and such benefits and obligations passed with the ownership. On January 14, 1981, the judge modified the December 19 order by finding it was not final and appealable because other issues had yet to be decided.

We agreed with Judge Murray's ruling, but, for reasons that no longer matter, this court reversed the judgment entered in the first trial and ordered a new trial.

At the new trial, C-B Realty alleged, among other things, the same causes of action described in counts II and III of the 1974 complaint. At trial, C-B Realty asked $972,052 for property damage and $410,829.66 for back real estate taxes. C-B Realty sought punitive damages of $1,355,000.

The trial court found that C-B Realty's claim that C&NW had a duty to pay certain taxes under the 1908 contract was untimely filed. The trial court awarded C-B Realty $36,351 for the water damage to its building and for lost rent. The trial court did not award punitive ...

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